Much has been written about making sure you do not outlive your retirement savings. This is a critical concept that financial advisors take into account that includes expected rates of return, spending habits and withdrawal rates from retirement accounts as well as many other factors.
Many planners and advisors use the Social Security’s Administrations life span of the mid 80’s for the average American, with men living to 83 and women 85. It is comforting to know that there are very accurate actuarial tables that can well-predict how long one will live based on current age and other factors.
However, what if you live longer and indeed much longer? Living to 95, or 100 or older used to be quite rare. Not so today. And what if due to your excellent health habits that you not only live longer, but that for the duration of your life you are able-bodied and are living well?
The reality is that most people are not comparing their current state of retirement savings to the medical and scientific advances being made. There are extraordinary achievements being made in medical science, nutrition, and physical fitness that may very well extend life and quality of life greatly. When you add in consumer-facing apps that are wellness and health oriented, for example the iWatch by Apple that gives you constant oxygenation levels and heart beat levels, it becomes easier to see that the technical world is investing vast sums of energy and money to extend our lives. The inflection point and potential problem is that a sudden rise in life span will leave retirees with a massive problem.
Everyone wants to live as long and as well as possible, but few visualize living well at 102 years old with literally no money left to enjoy the fruits of good health.
In recent years there have been Cancer treatments that have fully treated specific forms of the deadly disease, nutritional changes that eliminate the need for drugs for some with diabetes and even very recently the successful procedure of using a pigs heart for a human patient who would otherwise not survive. If this latter procedure proves to be workable, there will be an endless supply of hearts for transplants according to the medical team involved in this ground breaking event.
So how do you possibly mitigate significant longevity risk?
The first step is to actively consider and think about this issue and not put it aside to deal with it another day. Procrastination is one of the worst things an investor can do. The old adage of “the best day to invest was 30 years ago, the second best is today” is incredibly relevant to this discussion.
Second, some of the common tips of extending Social Security payments, working later, and reducing your expenses now to save more will not likely get you an additional 20-30 years of retirement so new thinking is best.
The third and most important action to take is to actively bring this discussion to your financial advisor or financial planner. Make it part of every conversation you have with your financial pro. Dramatically outliving your retirement fund is an emotional issue and its vital to have your objective advisor think through the options and what-ifs with you.
Starting today is the best investment you will make to address an ultra-longevity scenario.
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